1. The Field of the Invention
The present invention relates to systems for electronically transferring funds. In particular, the present invention relates to electronic payment systems in which an account number is activated for a limited period of time or for a limited number of transactions, such that unauthorized persons are prevented from gaining access to the account.
2. The Prior State of the Art
During recent years, the use of cash in financial transactions has been increasingly replaced with various forms of electronic payment. For example, credit cards and debit cards are now commonly used by consumers to make purchases or to otherwise authorize the transfer of funds to merchants. Such electronic forms of payment have become widely used for many reasons, including convenience and the ability to maintain an electronic record of transactions.
In order to enable electronic payment, a bank or another financial institution typically establishes an account for a consumer and issues a card that enables a consumer to conveniently authorize funds to be drawn from the account. The account is generally associated with a multi-digit account number that uniquely identifies the account. Often, the account number is printed on the face of the card issued to the consumer and may also be encoded in a magnetic strip on the card. In order to execute a transaction using the account, the consumer can present the card to a merchant, who makes a copy of the account number written or encoded on the card. The merchant ordinarily verifies that the cardholder is authorized to make a purchase using the card by requiring the card holder""s signature or receiving a personal identification number (PIN). The signature can be recognized as belonging to the cardholder by comparing the signature against an authorized signature written on the card. The PIN is a multi-digit number that is not encoded or written on the card but is instead memorized by the cardholder.
Signatures and PINs represent a first line of defense to prevent the unauthorized use of credit and debit cards by persons other than the rightful account holder. The cardholder""s signature can be seen as evidence of the identity of the person using the card. Likewise, since the PIN is supposedly known only by the cardholder, its use by a person using the card generally verifies that the person is an authorized cardholder. In many situations, however, persons who fraudulently use credit or debit cards are able to circumvent these security measures. For instance, signatures can frequently be forged by unauthorized persons. Moreover, merchants sometimes do not carefully verify that the signature presented by a person using a card matches the authorized signature. There are also many commercial environments in which signatures cannot be obtained, such as automated teller machines, telephone commerce, self-serve gasoline pumps, and Internet and other on-line transactions. In these situations, merchants might require the user of the card to present a PIN. However, if an unauthorized person obtains the PIN in addition to the card number, there may be no way to detect fraudulent use until after the fact.
The difficulty of preventing the unauthorized use of credit or debit cards has made many consumers hesitant to use such forms of payment, particularly over the telephone and via the Internet or other communication networks. Many people have experienced the inconvenience of unauthorized use of their credit or debit cards. Financial institutions have also spent much time and effort in developing new systems of preventing unauthorized use of credit or debit cards.
It has been widely observed that consumers are hesitant to transmit their account numbers over open networks such as the Internet and the telephone systems. Many people fear that their account numbers will be intercepted, while others are reluctant to divulge their account numbers and PINs to persons who are essentially strangers. Encryption technology has been used to reduce the likelihood that credit and debit card numbers can be intercepted from the Internet during transmission. However, many experts in Internet security recognize that encryption technology can be seen as a moving target, in that security techniques that would recently have been foolproof are now subject to being breached.
In view of the foregoing, what is needed is a system for executing electronic transactions that introduce a level of security that has not been possible by the mere use of signatures, PINs, and encryption technology. It would be an advancement in the art to provide an electronic transaction system that will permit consumers to authorize the use of credit and debit accounts over the telephone or the Internet without the fear of the unauthorized use of their account numbers. It would be a further advancement in the art if such systems could be practiced in the basic architecture of conventional communications networks with little additional cost to consumers, merchants, or financial institutions.
The present invention relates to electronic transaction systems in which an account number is activated for a limited period of time or for a limited number of transactions. According to the invention, a financial institution establishes an account for an account holder. The account issuer creates two account numbers to be associated with the account. First, a conventional credit or debit card number is associated with the account. Second, a limited-use account number is associated with the account and is activated only upon an explicit request by the account holder.
The regular account number is activated indefinitely and can be used by the account holder to initiate transactions in a conventional manner. In situations where the account holder wants to employ heightened security measures, the account holder contacts the account issuer and requests that the limited-use number be temporarily activated. The limited-use account number remains activated until limited conditions are satisfied. For example, the limited conditions may specify that the limited-use number is to be deactivated when a certain number of transactions have been executed or when a certain period of time has expired.
Once the limited-use account number has been activated, the account holder can initiate transactions in a conventional manner. If for example, a limited-use account number is activated for a certain period of time, the account issuer deactivates the account number upon the expiration of the certain period of time. In the meantime, the account holder can use limited-use account number to initiate any desired number of transactions. Ifs the limited-use number is instead activated for a certain number of transactions, the account issuer uses the limited-use account number until the specified number of transactions have been executed. In either case, once the limited-use account number is deactivated, it cannot be used to authorize transactions until it is again activated.
The limited conditions under which the limited-use account number is activated gives account holders the assurance that their account will not be misused by an unauthorized person. In a specific example, an account holder can request that the limited-use account number be activated for a single transaction. The account holder can then transmit the limited-use account number over the Internet or over the telephone to execute a single transaction. After the transaction is completed, any person that may have obtained the account number will be prevented from gaining access to the account.
Additional objects and advantages of the invention will be set forth in the description which follows, and in part will be obvious from the description, or may be learned by the practice of the invention. The objects and advantages of the invention may be realized and obtained by means of the instruments and combinations particularly pointed out in the appended claims. These and other objects and features of the present invention will become more fully apparent from the following description and appended claims, or may be learned by the practice of the invention as set forth hereinafter.